Robert Shiller, professor of economics at Yale University and co-founder of Case-Shiller Index, speaks with CNBC’s “Squawk on the Street” on the Fed’s decision to hike rates for the fourth time in 2018.
Yale’s Robert Shiller: Fed Is Being Reasonable Amid Decision To Hike Rates
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Transcript
Robert first off give me your take on Jerome Powell and the Fed's decision to hike rates and potentially continue to next year as well. Well. Powell seemed to me a very level headed man.
Who is doing his job. He's not intimidated. And we've had very low federal funds rate. They've been negative for years. It's about the time they come up to zero or something like that when the economy is showing signs of strength. So I'm impressed with what he's doing and it seems to me. Shouldn't stir the markets a whole lot.
It seems to be steering the markets a whole lot. So you disagree with the market reaction. Yeah well I think the market.
Does it does have an immediate reaction to news but the volatility that we've seen in the market precedes as it goes back to the beginning of January February of 2018.
So it has something else to do. It's not a. I think we have a very reasonable fed that is doing their job and it doesn't look out of bounds at all. I mean I get it that the Fed shouldn't be responsible for putting a floor under the markets and shouldn't have to have the markets back all the time and.
That's the whole idea of the Fed put. And maybe that's not there anymore we have to take the medicine. But I think the bigger worry here is that the Fed is missing something and that while the economic data is OK. It's actually showing signs of a slowdown worse globally. And we're starting to feel it here and the Fed's tightening into that environment.
Where I am worried about the slowdown. We have a very we've had a very highly priced stock market and housing market and bond market and we've had a recovery that's almost in terms of the. Expanse NBER expansion is almost setting a record.
And people are starting to phase onto that. Think about that. So. I am worried about these markets and about a recession but this step is so the steps the Fed is just so reasonable on the. Basics and it's such a small step and they also pull back from. Three to two projected increases in the coming year. I just don't I don't think I think that the turmoil in the markets. Has some. Other. It's more the theory that we're hearing about some correction is overdue than any specific action of the Fed.
